Monsters Incorporated (MI) in ready to launch a new product. Depending upon the success of this product, MI will have a value of either $100 million, $150 million, or $191 million, with each outcome being equally likely. The cash flows are unrelated to the state of the economy (i.e. risk from the project is diversifiable) so that the project has a beta of 0 and a cost of capital equal to the risk-free rate, which is currently 5%. Assume that the capital markets are perfect. Assume that in the event of default, 20% of the value of MI's assets will be lost in bankruptcy costs and suppose that MI has zero-coupon debt with a $125 million face value due next year. The initial value of MI's debt is closest to:

Answers

Answer 1

The Initial value of debt is $111.11 million.

Value of unlevered equity = ($100 million+ $150 million + $191 million)/3 / 1.05

Value of unlevered equity = $147 miliion / 1.05

Value of unlevered equity = $140 million.

Since the corporation have has zero-coupon debt with a $125 million face value, this means If the firm has a value of $100 million, all of it is from the debt value,

Initial value of debt = ($100 million + $125 million + $125 million)/3 / 1.05

Initial value of debt = $111.11 million.

The Initial value of equity = Value of unlevered equity - Initial value of debt

The Initial value of equity = $140 million - $111.11 million

The Initial value of equity = $29 million

Hence, the Initial value of debt is $111.11 million.

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Related Questions

where does the 32 come from in cash received for common stock issued

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A public company can issue common stock to the shareholders of acquisition targets, which they can then sell for cash. This approach is also possible for private companies, but the recipients of those shares will have a much more difficult time selling their shares.

Multiply the number of shares issued by the price per share. Doing this calculation gives you the amount of cash raised by the sale of the stock. For example, if the company issues 100 shares at $10 per share, the result is $1,000 of additional capital raised from stock issuances.

Jack is a 74-year-old, single taxpayer whose income consists of $10,000 in wages and $31,000 in social security benefits. The maximum amount he can contribute to a Roth IRA for 2019 is: A) $0 B) $6,000 C) $7,000 D) $10,000

Answers

Based on his age and income, the maximum that Jack is able to contribute to a Roth IRA in 2019 is C. 7,000.

In the year 2019, tax laws were such that:

$6,000 was the maximum to be contributed to Roth IRA. $1,000 could be contributed in excess by those above the age of 50.

As Jack is above the age of 50, he can contribute an extra $1,000 over the limit which puts him at:

= 6,000 + 1,000

= $7,000

In conclusion, Jack can contribute a maximum of $7,000.

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During the external audit of Indico Ltd, which provides industrial maintenance services, the audit senior discovered that the operations director, with the approval of the other directors of Indico, had instructed employees to breach statutory health and safety regulations so that the company would benefit from cost savings. Explain the audit senior’s and the audit firm’s responsibilities in respect of this matter.

Answers

Basically, an auditing is done to examine an organization's financial records to determine the accuracy and to check if they are prepared in accordance with applicable accounting rules.

An external audit is the auditing done by an independent accountant to examine the financial records of the firm,

Since the audit senior (external audit) discovered that the firm instructed their employees to breach statutory health and safety regulations to save cost, then, it is apparent that a rule have been violated.

In conclusion, in this case, the audit senior is required to report the discovery to necessary department for proper sanction and the audit firm is at responsinility to prove it does not default to safety regulation.

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3. Aesop is not using traditional advertisements or discount sales to promote its products. Instead, Aesop gets its promotional communication mostly by word-of-mouth for the design of its products, stores, and events, which are a singular mix of indulgent product experiences, thoughtful language, and modern minimalist design. If you had to interact with Natura & Co SA, which customer engagement model--Natura's, The Body Shop's, or Aesop's-- would be the best for you and why?

Answers

Based on the information given, the model that will be appropriate for the company is the client commitment model.

The client commitment model is a model whereby a company provides and meet the needs of the customers. It is important as it assists the brand with comprehension.

Therefore, the interaction with interact with Natura & Co SA, will ensure that they use this model in order to get more customers, improve sales, and get more profit.

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what is likely to play a more important role in a mixed economy than in a free market economy

Answers

Answer:

Heya!

Explanation:

The characteristics of a mixed economy include allowing supply and demand to determine fair prices, the protection of private property, innovation being promoted, standards of employment, the limitation of government in business yet allowing the government to provide overall welfare, and market facilitation by the self-interest of the players involved.

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A company provided the following data: sales, $510,000; beginning inventory, $41,000; ending inventory, $46,000; and gross profit, $159,000. What was the amount of inventory purchased during the year?

Answers

Answer:

23.000

Explanation:

what is marketing planing

Answers

Answer:

The marketing plan details the strategy that a company will use to market its products to customers. The plan identifies the target market, the value proposition of the brand or the product, the campaigns to be initiated, and the metrics to be used to assess the effectiveness of marketing initiatives.

Answer:

Marketing planning is a part of a design to achieve a goal. The marketing plan contains an action plan (who does, what and when) and a vision, strategic objectives, goals, and objectives

The number of textile and agricultural jobs in NC have decreased due to:

Answers

The downfall of the textile industry in South Carolina was attributed to factors such as cheaper labor elsewhere, technology, automation, and other factors related to modernity, wages, education, and economic diversification.

What do you mean by economic diversification?

Economic diversification is the process of transitioning a country's economy from a reliance on a single revenue stream to a variety of sources coming from an expanding number of industries and markets.

It has historically been used as a tactic to promote beneficial economic growth and development.

Diversifying away from vulnerable goods, markets, and jobs in favor of revenue sources that are low-emission and more climate resilient becomes more pertinent in the context of adaptation to climate change.

With more than 2,800 unique products exported to more than 120 nations, Chile is an example of a varied economy. Zambia, a country with equal copper resources, exports just over 700 goods, or one-fourth of Chile's total exports, and only to 80 nations.

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As a general rule a recession is a decline in real GDP that lasts at least

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Answer:

A recession is a significant economic downturn spread across the economy that lasts more than a few quarters. More specifically, the term is typically defined as a period when gross domestic product (GDP) declines for two consecutive quarters

Help help help help help help please please

Answers

Answer:

A

Explanation:

The final answer would be A

Which of the following is true of the kinked demand model of​ oligopoly?
A. Each firm believes that if it lowers its price the other firms will follow​ suit, but if it raises its price the other firms will not raise their prices.
B. Each​ firm's marginal revenue curve is discontinuous at its current level of output.
C. The model predicts price rigidity. For​ example, the firms may not change their prices when marginal costs change.
D. All of the above are true.

Answers

Answer: D

Explanation:

Which of the following statements is CORRECT? Question 9 options: The AFN equation for forecasting funds requirements requires only a forecast of the firm's balance sheet. Although a forecasted income statement may help clarify the results, income statement data are not essential because funds needed relate only to the balance sheet. Dividends are paid with cash taken from the accumulated retained earnings account, hence dividend policy does not affect the AFN forecast. A negative AFN indicates that retained earnings and spontaneous liabilities are far more than sufficient to finance the additional assets needed. If the ratios of assets to sales and spontaneous liabilities to sales do not remain constant, then the AFN equation will provide more accurate forecasts than the forecasted financial statements method. Any forecast of financial requirements involves determining how much money the firm will need, and this need is determined by adding together increases in assets and spontaneous liabilities and then subtracting operating income.

Answers

AFN has negative and positive sides. The correct statement is A negative AFN indicates that retained earnings and spontaneous liabilities are far more than sufficient to finance the additional assets needed.

AFN is known as Projected increase in assets – spontaneous increase in liabilities – any increase in retained earnings.

When the AFN value is negative, it means the action or project that is underwork will bring about extra income for the company, which can be invested in another place.

Additional funds needed (AFN) is known as financial term used when a business intends to widen its operations.

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On October 1, 2014, Dakota Company issued an $800,000, 10%, nine-month interest-bearing note. If the Dakota Company is preparing financial statements at December 31, 2014, the adjusting entry for accrued interest will include

Answers

Based on the information given the adjusting entry for accrued interest will include debit to Interest Expense of $20,000.

The appropriate adjusting entry to record the given transaction is:

Dakota Company journal entry

December 31, 2014

Debit Interest Expense

Credit Interest Payable $20,000

($800,000×10%×3/12)

(To record accrued interest)

Inconclusion  the adjusting entry for accrued interest will include debit to Interest Expense of $20,000.

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Scenario 1
A specific department within an organization has a high turnover rate; employees of this department
have a shorter average tenure than those of other departments in the company. Skilled workers are
leaving and the worker population contains a high percentage of novice workers. Ms Joyce Lynn has no
idea what is going on and wants to know more about what is happening.

Answers

Based on the information given, the researcher should proceed by finding the root cause of the problem.

From the complete question, the purpose of the study will simply be to find the be root cause of the problem firstly.

Also, the time horizon of the study should be taken into consideration. Furthermore, the research strategy that'll be applied in this case should be analyzed.

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Suppose the cross-price elasticity of travelling by bus and travelling by train is 0.7. If the price of traveling by bus increases by 40%, how much would the quantity of traveling by train change

Answers

The quantity of traveling by train would change by 28%.

Cross-price elasticity measures how the quantity demanded of a good is affected by changes in the price of another good.

Cross price elasticity = percentage change in the quantity demanded of good A / percentage change in the price of good B.

0.7 = percentage change in the quantity of traveling by train / 40%

Percentage change in the quantity of traveling by train = 40 x 0.7 = 28%

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Bruno Company had a $200,000 beginning balance in bonds payable and a $210,000 ending balance in bonds payable. During the year, Bruno paid off $100,000 of bond liabilities. Based on this information alone, Bruno's statement of cash flows would include a ______ from financing activities.

Answers

lose

Explanation:

if he start the company with 200000 beginning+10000 which

will be 210000 after he paid bond 100000 he will having balance of 110000

Jerome is assisting with strategic planning for his organization's information system. He knows that information system organizational strategy is influenced by four main drivers: _____. a. corporate strategy, business unit strategies, innovative thinking, and technology innovations b. technologies, competencies, people, and projects c. strategic planning focus, information system goals, business unit strategy, and typical projects d. decision-making frameworks, focus of resource use, business opportunities, and communication among management and other personnel

Answers

Jerome is assisting with strategic planning for his organization's information system. He knows that information system organizational strategy is influenced by four main drivers: d. decision-making frameworks, focus of resource use, business opportunities, and communication among management and other personnel.

The information system is introduced in companies that want to change their methods of operations, goals, products, and services to meet up to their competitions or supersede them.

To successfully achieve these objectives, the resources, business strategies, decision-making framework, and communication should be strengthened to implement the Information system

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What is the balance between supply and demand called ?

Answers

Answer:

I think it is Market equilibrium

The balance between supply and demand is known as the market equilibrium.

The supply and demand are determined through the price mechanism in a free market. Such as if the goods or services are bought more frequently then their prices will go up and vice versa.

This means that the price mechanism helps to determine what goods are to be produced. In the case where the demand for good increase will result in price go up and will ultimately result in producers supplying more of those goods.

This system of price helps to scale the point where competing demands may be weighed by the consumer or producer requirements.

However, the movement towards the price equilibrium and the resulting balance between the supply and demand is known as the market equilibrium.

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Which of the following is appropriate interview attire for women?

a
A bright pink, floral suit

b
A t-shirt with a skirt

c
Multiple large necklaces

d
Dark-colored, closed-toed shoes
Will Give Brainlest!! Quickly Please!!! <3

Answers

Answer:

I'm going to say the answer is B ! I could be wrong but this is what i think :)

Explanation:

Answer: The answer is (D) Dark-colored, closed-toed shoes. Although a skirt is a smart choice, a t-shirt is considered informal and you should not choose this answer.

Explanation: I hope this helps good luck! also I got a 100 on the test.

Which type of listening occurs when we are focused on sharing our own point of view instead of listening to someone else?​

Answers

Answer:

pwede ba po tagalog

nalang pwede

Baby Goods Inc. buys Child Shops Inc. in an attempt to gain monopoly power. Remedies that a court might impose in a suit against Baby Goods for a violation of the antitrust laws include Group of answer choices using its market power to encourage increased competition. funding new entries to the relevant market. divesting itself of the control or ownership of Child Shops. all of the choices.

Answers

Based on the information given regarding the monopoly power, the remedy by the court will be divesting itself of the control or ownership of Child Shops.

It should be noted that antitrust laws are put in place in order to protect consumers from business practices that are predatory and also ensure fair competition.

Since antitrust laws recommend the breaking of certain business conducts, there'll be the divesting of the company of the control or ownership of Child Shops.

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Which of the following is not a type of trademark? fanciful arbitrary simple suggestive

Answers

Considering the available options, the choice that is not a type of trademark is "Simple."

What is a Trademark?

Trademark is the term used to describe the word, phrase, design or symbol, or combination thereof.

Generally, the purpose of a Trademark is to create the identity for the source of the commodities such that these commodities can be easily differentiated from similar commodities.

Different types of Trademarks

There are four major categories of Trademarks which include the following:

Coined or Fanciful trademarkArbitrary trademarkSuggestive trademarkDescriptive trademark

Hence, in this case, it is concluded that the correct answer is "Simple."

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Answer:

The answer is B

Explanation:

got it right on edge 2022

6.You now have the agreement with the company and will sign the contract as you and the company are satisfied with the contract agreement. Of course, this is will be your first step to build a strong relationship between you and your employer. Your manager will know more about you. This represent which of the negotiation process element?
A- Gather information

B- Manage concessions

C- Manage time

D- Build the relationship

Answers

your answer is build the relationship

Help buissness help help help

Answers

answer is Mucus Fleming as he is a sports player. (:

Answer:

milton fredman

Explanation:

Use the following information of VPI Co. to prepare a statement of cash flows for the year ended December 31 using the indirect method. (Amounts to be deducted should be indicated by a minus sign.)
Gain on sale of machinery $42,400
Cash received from sale of machinery 7,400
Increase in accounts payable 6,400
Net income 10,400
Decrease in accounts receivable $ 2,600
Cash balance at prior year-end Increase in inventory 3,400
Depreciation expense 10,700
Cash received from issuing stock 2,700
Cash paid for dividends 5,400
VPI CO.
Statement of Cash Flows (Indirect Method)
For Current Year Ended December 31
Cash flows from operating activities
Adjustments to reconcile net income to net cash provided by operating activities
Income statement items not affecting cash
Changes in current operating assets and liabilities
Cash flows from investing activities
Cash flows from financing activities

Answers

god help you with this homework

What do you think the curves would look like in the next 100 years?

Answers

Answer:The last 100 years have seen a massive fourfold increase in the population, due to medical advances, lower mortality rates, and an increase in agricultural productivity made possible by the Green Revolution.

The subsequent price and quantity of Rift pen is 19 and 20 respectively, while its initial price and quantity demanded is 20 and 16 respectively. A.Calculate the Price Elasticity(Ep) of Demand B. Is it Elastic or inelastic?why?

Answers

From the information given, the price elasticity of demand is -5% and it can be sent that it's elastic.

The percentage change in the quantity demanded will be:

= (20 - 16) / 16 × 100

= 25%

The percentage change in price will be:

= (19 - 20) / 20 × 100

= -5%

Price elasticity of demand = 25/-5 = -5

Sincere it's greater than 1, it's elastic.

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Davis Manufacturing Company had the following data:
January 1 December 31
Accounts receivable $27,000 $33,000
Materials inventory 22,500 6,000
Work in process inventory 70,200 48,000
Finished goods inventory 3,000 15,000
Collections on account were $625,000.
Cost of goods sold was 68% of sales.
Direct materials purchased amounted to $90,000.
Factory overhead was 300% of the cost of direct labor.

a. Compute sales revenue (all sales were on account).
$ ___________________

b. Compute cost of goods sold.
$ ______________

c. Compute cost of goods manufactured.
$ _______________

d. Compute direct materials used.
$ ________________

e. Compute direct labor incurred.
$ ________________

f. Compute factory overhead incurred.
$ __________________

Answers

a) The computation of the sales revenue is $631,000.

b) The computation of the cost of goods sold is $429,080.

c) The computation of the cost of goods manufactured is $441,080.

d) The computation of the direct materials used is $106,500.

e) The computation of the direct labor incurred is $78,095.

f) the Computation of the factory overhead incurred is $234,285.

How are the figures above computed?

The ledger accounts of the inventory accounts can help in the computation of the above figures as shown below.

Data and Calculations:

                                              January 1     December 31

Accounts receivable               $27,000        $33,000

Materials inventory                   22,500            6,000

Work in process inventory       70,200          48,000

Finished goods inventory          3,000           15,000

Collections on account were $625,000

Cost of goods sold was 68% of sales.

Direct materials purchased amounted to $90,000

T-Accounts:

Accounts receivable:

Beginning balance   $27,000

Sales (missing)        631,000

Cash collection                       $625,000

Ending balance                         $33,000

Cost of goods sold is $429,080 ($631,000 x 68%).

Materials inventory

Beginning balance   $22,500

Purchases                   90,000

Work in process                        106,500

Ending balance                          $6,000

Work in process inventory

Beginning balance    $70,200

Materials inventory    106,500
Direct labor                  78,095

Factory overhead     234,285

Finished goods inventory        $441,080

Ending balance                          $48,000

Finished goods inventory

Beginning balance        $3,000

Work in process         $441,080

Cost of goods sold                      $429,080

Ending balance                                15,000

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Gerrald Express is a partnership business registered in Singapore. The partners are Glenn and Kim. Each of the partners contributed $50,000 as capital to the partnership and they share equally in the profits and losses.

The partnership carries on the business of marketing services. In the financial year ended 31 December 2020, the partnership recorded a net loss of $79,000 after charging the following items of expenses:

Interest on capital paid equally to the partners $5,000
Glenn salary and bonus 12,000
Kim salary and bonus 15,000
Kim’s airfares for business purposes 4,800
Glenn’s taxi fare reimbursements for business 1,200
Motor car expenses reimbursed to employees 3,000
Depreciation 6,000
Interest on loans to fund operating expenses 2,800

Besides his involvement in partnership business, Glenn is also the Executive Officer of a medium size Company in Singapore. He was paid annual remuneration of $78,000 for the year ended 31 December 2020.

His spouse has no income for last year and has 2 children aged 19 and 12. The son is serving National Service and Glenn did not perform any active NS training in the previous year.

Required:

a) Compute the amount of tax adjusted profit or loss of the Gerrald Express partnership for the year of assessment 2021; [8 marks]

b) Compute the assessable income of Glenn for the year of assessment 2021; [12 marks]


c) State the major difference in a partner’s liability to utilise the losses arising from a partnership and from a limited liability partnership. [10 marks]

Answers

Answer:

i dont knowpls mark me as brinlest

Explanation:

Imagine you own a company that makes YOUR FAVORITE PRODUCT.

Answers

Answer:

I am not sure what you want me to answer but Ill give you my P.O.V

Explanation:

If I had my own company with my favorite product I would have created more of the things related to that product. And invest my money in other products I enjoy using. And improve on that product make it better.

I would probably use that product and make more products that people like
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